The opinion of the court was delivered by: ANNE THOMPSON, Senior District Judge
This matter is before the Court on Defendant United Services
Automobile Association's ("USAA") motion to dismiss Plaintiff
Chubb Custom Insurance Company's ("Chubb") Amended Complaint for
lack of subject matter jurisdiction pursuant to Fed.R.Civ.P.
12(b)(1) and 12(h)(3). The Court has decided this motion based
upon the submissions of the parties and without oral argument
pursuant to Fed.R.Civ.P. 78. For the following reasons,
Defendant's motion to dismiss is granted.
On June 13, 2004, Plaintiff Chubb filed an action in this Court
seeking a declaratory judgment that Plaintiff had no duty to
indemnify Defendant USAA for claims from a class action lawsuit
in Illinois state court. In its Amended Complaint, Plaintiff
alleged that this Court had diversity jurisdiction over the action because Defendant is a
Texas corporation, with its principal place of business in Texas,
and Plaintiff is a Delaware corporation, with its principal place
of business in New Jersey.
On August 5, 2005, Defendant filed the present motion to
dismiss. Defendant alleges that it is not a Texas corporation,
but is instead a reciprocal interinsurance exchange, which should
be treated like an unincorporated association for diversity
jurisdiction purposes. Defendant argues that because it has
members in all 50 states, it is a resident of all 50 states. As a
result, Defendant contends that there can be no diversity of
A. Lack of Subject Matter Jurisdiction
In reviewing a motion to dismiss based on a factual attack on
subject matter jurisdiction, a court does not presume that the
plaintiff's allegations are true. Mortensen v. First Fed. Sav. &
Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). Instead, a court
"is free to weigh the evidence and satisfy itself as to the
existence of its power to hear the case." Id. The plaintiff has
the burden of proving that jurisdiction exists. Id. If a court
finds that it does not have subject matter jurisdiction, then it
must dismiss the action under Fed.R.Civ.P. 12(h)(3).
Federal district courts have diversity jurisdiction over civil
actions where the amount in controversy is more than $75,000, and
where the action is between citizens of different states.
28 U.S.C. § 1332(a). For purposes of diversity jurisdiction, a
corporation is treated as both a citizen of the state where it is
incorporated, and of the state where it has its principal place
of business. 28 U.S.C. § 1332(c). An unincorporated association,
on the other hand, is treated as a citizen of each state where it
has a member. Carlsberg Res. Corp. v. Cambria Sav. & Loan
Ass'n, 554 F.2d 1254, 1258 (3d Cir. 1977).
A reciprocal interinsurance exchange consists of a group of
people, called subscribers or members, who cooperate to insure
each other against designated risks. See 3 Couch on Ins. §
39:48 (2005). It is "something more than a partnership and
something less than an insurance corporation." Id. Because a
reciprocal interinsurance exchange has "no legal existence
separate from its subscribers, [it] is therefore considered an
unincorporated association." Lumberman's Underwriting Alliance
v. Hills, 413 F. Supp. 1193, 1195 (W.D. Mo. 1976).
B. Dismissal of Parties to Preserve Diversity Jurisdiction
A district court may dismiss parties to keep diversity
jurisdiction as long as those parties are not indispensable.
Kerr v. Compagnie de Ultramar, 250 F.2d 860, 863 (3d Cir.
1958). A court decides whether a party is indispensable based on
the context of each case. Provident Tradesmens Bank & ...